The Department of Children and Families has slowly implemented a pilot program to distribute excess federal earnings that support foster care and adoption assistance. Although the one eligible lead agency earned $209,690 in Fiscal Year 1999-2000, as of June 30, 2001, the department had not been billed for or disbursed these funds to the lead agency.

Preliminary indications are that the pilot is having positive effects by providing an incentive for the lead agency to modify its internal processes to maximize federal earnings. The lead agency plans to use earnings for additional foster care services and adoption assistance payments. Because these increased services will be eligible for additional federal reimbursement, they will generate an estimated additional $273,689 in federal funds. However, because the lead agency has not yet received these funds, it is not possible to assess their impact on client outcomes.

The pilot is set to expire on June 30, 2002. As it is having positive effects and state policy is to continue to privatize child protection services, we recommend that the Legislature continue the pilot and establish the program. The department should periodically report to the Legislature how lead agencies use excess earnings.